How advisors and firms have evolved to meet the needs of a changing business environment

Among the myriad of challenges that advisors face today are the limitations that their own firms are imposing on who they can do business with and how. Minimum household requirements, mandates on how advisors price their fee-based business and changing compensation grids come with the territory of being an employee these days. And while strategic adjustments such as these aren’t necessarily a new phenomenon – given every publicly traded firm’s mandate to maximize shareholder value – today’s regulatory climate coupled with an increasing cost of doing business has made for a more difficult operating environment.

As an example, a number of Wall Street firms revamped their international business units, with some opting out of the space altogether. After purchasing Merrill Lynch in 2009, Bank of America sold its off-shore wealth management offices to Julius Baer, and in August 2015 further narrowed the pool of international clients that its advisors would be able to service. RBC closed its Caribbean wealth management branches completely over 2 years ago and substantially reduced their international presence. And, ever tightening supervisory controls will be the order for any firm whose advisors service international clients, thus forcing many firms to reevaluate their continued interest in serving and supporting the space.

So, what are advisors to do when the firm they’ve spent their entire career at makes a strategic decision that significantly limits their ability to service their clients and grow their business? Is the issue an industry problem? Does every firm want out of the international space or is it a matter of choice, firm by firm? Some advisors – as a result of industry changes and more limitations placed upon them – will argue that adaptation is in order; these folks will accept their new reality, restructure their business and stay the course. Alternatively, many others will opt to leave their firm and find a home elsewhere—one that will be more welcoming of their business, and better equipped to support and grow it.

The real truth is that any employee advisor is vulnerable because they are subject to the ever-changing vision of their firm. Time and again, we’ve witnessed one wirehouse take the lead on making a strategic policy change and in time, every other major firm follows suit. Pre-financial crisis, advisors would have had limited choices beyond remaining beholden to a bulge bracket firm with a big brand name.  Conversely, today’s greatly expanded industry landscape offers advisors more sophisticated options than ever before. For those who have built a robust international business, there are a number of firms who perceive this niche as ripe with opportunity and are proving to be the destination of choice for high quality international advisors and teams. Firms such as Snowden Lane Partners and Dynasty Financial Partners have assembled best-in-class platforms, resources and capabilities to service international business and offer advisors greater freedom, flexibility and control. As we’ve seen of late, when one door seemingly closes, a new door opens that beckons with possibility.

Nothing frustrates an advisor more than having to be at the mercy of his firm.  While financial advisors often enjoy a high degree of autonomy (provided they are running a compliant business), that may not be enough given today’s changing business climate. Firms and business models born of the changing climate have created new opportunities for advisors, allowing them to evolve and meet the needs of their clients (as well as their own business and life goals). And it’s those advisors who recognize when it’s time to take advantage of these new opportunities that will thrive.